MEANING AND IMPORTANCE OF MANAGERIAL ECONOMICS

MANAGERIAL ECONOMICS
Managerial Economics is the integration of economic theory with business practice for the purpose of facilitating decision making and forward planning by the management.

ECONOMIC THEORY

BUSINESS PROBLEMS

MANAGERIAL ECONOMICS

(Decision making)

FEATURES
New discipline & recent origin.

Highly specialized & separate branch.

Branch of Micro economics.

Its a normative science, goal oriented & prescriptive science.

Its more realistic and pragmatic. Science of decision-making. Its both conceptual & metrical.

Use macro economic concept like National income, inflation, trade cycle etc.

SCOPE of Managerial Economics

Objectives of a firm. Demand analysis and Forecasting. Production and cost analysis.

Pricing decisions, Policies and Practices.

Profit Management. Capital Management.

Linear Programming & Theory of Games. Market Structure & conditions. Strategic Planning.

IMPORTANCE
Provides guidance for identification of key variable in decision-making.

Helps executives to understand various managerial problems.

Provides various concepts, technical skills, toolbox of analysis & techniques of thinking to solve business problems.

Its both a science & an art. Helps executives to become more responsive, realistic & competent. Helps in optimum use of scarce resources.

Helps in attaining industry leadership, market share expansion and social responsibilities etc. Helps firm in forecasting economic variables.

Helps in understanding the various external factors & forces which affects business decision.

FUNCTIONS
Decision Making Forward Planning